Escalante v. Funsan K. Corp.

Background

The parties asked the court to approve a settlement in a Fair Labor Standards Act (FLSA) wage case. On August 2, 2022, the court denied the parties’ proposed settlement without prejudice because they had not provided an estimate of each plaintiff’s damages and settlement payment, or an explanation for reducing Plaintiff Ruben Bruno’s damages by $5,000 based on an earlier payment.

The court gave the parties two options: submit a revised settlement and a new explanation of why it was fair and reasonable, or submit a joint letter stating that they were abandoning settlement. On August 23, 2022, the parties submitted a revised letter with an individual breakdown of damages and an explanation of Bruno’s reduction.

Settlement Calculations

The settlement provided for $30,000 to be distributed to the plaintiffs, including attorneys’ fees and expenses. The plaintiffs stated that their potential damages included $76,151.39 in unpaid wages, $15,000 in wage-notice and wage-statement damages, $76,151.39 in liquidated damages, and $30,056.23 in interest calculated through May 6, 2021.

The revised materials listed the following calculations and settlement allocations:

- Plaintiff Escalante: $84,570.60 in total calculated damages and a $7,817.92 settlement allocation. - Plaintiff Bruno: $112,788.41 in total calculated damages and a $10,363.28 settlement allocation.

The parties’ counsel calculated each plaintiff’s percentage of the total damages and applied that percentage to the net settlement amount payable directly to the plaintiffs. The court found that the worksheets included the possible sources of recovery—unpaid wages, liquidated damages, wage-notice damages, and interest—and supported the settlement’s fairness.

Bruno’s Earlier Payment

The parties stated that Bruno’s award was reduced by $5,000 because he had already received that amount under a separate agreement with the defendants. The plaintiffs argued that the earlier agreement’s release should not be treated as binding because, among other reasons, it contained one-sided terms, was not translated into Spanish, and prohibited Bruno from consulting an attorney. The defendants disagreed and stated that Bruno entered the agreement voluntarily and without coercion.

The parties nevertheless agreed to account for the earlier payment in the settlement to avoid the risks, time, and expense of litigating the disputed issues. The court found the settlement fair and reasonable because Bruno’s damages calculation represented his maximum possible recovery, less the $5,000 payment he confirmed receiving. The court also stated that whether the earlier agreement released Bruno’s claims was irrelevant at that point because the parties had settled.

Other Settlement Terms

The court had previously reviewed the remaining settlement provisions and found them apparently fair and reasonable. It determined that the release was not overbroad because it covered only the claims at issue in the case that arose before the agreement was executed. The court also noted that the non-disparagement provision allowed truthful statements, the agreement did not restrict the plaintiffs from discussing the settlement, and it did not bar the plaintiffs from future employment. The court separately found the attorneys’ fees fair and reasonable.

Ruling and Effect

The court found the proposed settlement fair and reasonable and approved the parties’ settlement agreement. It directed the Clerk of Court to terminate any open motions and close the case.